Cosmo Energy

Cosmo’s CapEx investments in low-carbon activities have decreased from 20% to 14% since the previous benchmark assessment. This represents a significant decrease hindering its planned projects. Cosmo’s low-carbon spending is still far off the sectoral expectation which indicates that companies should invest 77% of CapEx in low-carbon projects to align with a 1.5°C scenario. Cosmo can improve its performance on material investment by ramping up the current CapEx share allocated to low-carbon technologies while beginning to invest in carbon removal technologies.

The company invests 11% of its total R&D in low-carbon projects such as wind power generation. This represents a significant proportion of Cosmo’s spending but is still far off the sectoral expectation which indicates that companies should invest 77% of R&D in low-carbon projects to align with a 1.5°C scenario. Cosmo can improve its performance on intangible investment by ramping up the current R&D share allocated to low-carbon technologies while beginning to invest in research for carbon removal technologies.

Even though scope 3 emissions account for the vast majority of Cosmo’s emissions, the company does not detail a client engagement strategy. Cosmo has implemented one activity to influence clients to reduce their emissions, which focuses on electric vehicle (EV) charging services. Yet this activity is not sufficient to incite a meaningful reduction in Cosmo’s scope 3 emissions. Cosmo can improve by creating a client-engagement strategy that is governed by a clear policy and is integrated into its business decision-making.

Cosmo has a target to expand its current 300,000 kilowatt (kW) onshore wind capacity to 1.5 gigawatts (GW) from both onshore and offshore projects by 2030. It currently has 63,000 kW onshore and 140,000 kW offshore wind power projects under construction, all of which will be operational in 2023. This business model is profitable for Cosmo, but it represents less than 1% of the company’s 2021 net sales and is nearly 9% less than in the 2021 benchmark assessment. If scaled up, Cosmo’s wind business will be an opportunity for a low-carbon-aligned revenue stream for the company.

Cosmo aims to achieve zero scope 1 and 2 emissions by 2050. It is unclear if Cosmo will use offsets to achieve this target. It aims to reduce scope 1 and 2 emissions by 30% from 2013 to 2030 and scope 1, 2 and 3 emissions by 10% from 2013 to 2023. Further, the company has a target to reach 1.5 GW of wind power generation capacity by 2030. However, the company lacks a net-zero target which covers its scope 1, 2 and 3 emissions. This undermines the company’s commitment to a low-carbon transition.

Cosmo is planning to reach its targets by optimising and increasing the energy efficiency of its own operations. It is expanding wind power generation. Cosmo aims to generate 1.5 GW of electricity from wind power, of which approximately 900,000 kW will be onshore and 600,000 kW will be offshore capacity. The company aims to expand its EV charging and EV leasing businesses. However, Cosmo has not committed to phasing out fossil fuels and its transition relies on offsets.

In 2021, Cosmo invested 14% of its CapEx into its wind power generation activities. However, this is a 6% decrease from the 20% low-carbon CapEx the company had in the 2021 benchmark assessment. The company has allocated 11% of its R&D spending to low-carbon technologies such as wind power generation and EVs. However, both are still significantly lower than the sectoral expectation which indicates that companies should invest 77% of CapEx and R&D in low-carbon projects to align with a 1.5°C scenario.

Between 2017 and 2021, Cosmo’s scope 1 and 2 emissions intensity decreased slightly and is projected to remain constant between 2021 and 2026. The company is required to annually decrease its scope 1 and 2 emissions intensity by nearly 6% to align with its 1.5°C pathway. Moreover, the company’s scope 3 emissions are projected to overshoot its 1.5°C carbon budget by 2050. To align with its 1.5°C pathway, Cosmo needs to decrease its scope 1, 2 and 3 emissions intensity by 4% annually.

Cosmo’s investments in wind power generation and EVs support its low-carbon transition. However, while the company is expanding its wind power generation business, it has not yet committed to phasing out fossil fuels. The company also does not have a net-zero target covering scope 1, 2 and 3 emissions. Cosmo can strengthen its performance by setting more frequent interim emissions targets and increasing its CapEx and R&D investments in low-carbon activities.

The company publicly discloses a commitment to engaging in social dialogue with workers and unions. However, no relevant disclosure was found regarding the categories of stakeholders it engages with on a just transition. Nor was there any evidence to show the company’s ongoing social dialogue and meaningful engagement with affected stakeholders. No evidence was found of the company undertaking just transition planning to mitigate the social impacts of the low-carbon transition on workers, affected stakeholders and its business relationships. Additionally, no evidence was found to demonstrate the company’s engagement in social dialogue and with stakeholders in its just transition planning.

No public commitment by the company was found stating the company’s intention to create and support access to green and decent jobs as part of the low-carbon transition. Moreover, no evidence was found of the company’s actions to promote these jobs in a way that ensures gender balance and inclusion of vulnerable groups. Additionally, no relevant disclosure was found of the company’s assessment of employment dislocation risks. No public commitment by the company was found stating its intention to re- and up-skill workers displaced by the transition to a low-carbon economy. Additionally, no evidence was found that the company reskills and upskills workers in a way that ensures gender balance and inclusion of vulnerable groups.

No relevant disclosure was found to show if the company identifies impacts of the low-carbon transition on social protection for workers and affected stakeholders, nor how it contributes to social protection. Additionally, no evidence was found that the company expects its business relationships to contribute to the social protection of their workers and affected stakeholders. No relevant disclosure was found to show how the company identifies any misalignment of its lobbying activities with policies and regulations that support the just transition, nor of the measures it takes to address misalignment. Furthermore, no evidence was found that the company lobbies for policies and regulations for green and decent job creation; retention, education and reskilling; and social protection for workers.

The company commits to respecting human rights and the ILO fundamental rights at work, and it expects its business relationships to respect the ILO fundamental rights at work. No evidence was found of the company’s process to identify, assess and mitigate salient human rights risks in its own operations and in its supply chain. Moreover, no evidence was found of the company disclosing the stakeholders whose human rights have been affected by its activities. The company does have a grievance mechanism available to workers, but it is unclear whether the mechanism is available to external stakeholders.

The company commits to respecting the health and safety of its workers and expects the same commitment of its business relationships. No evidence was found of the company having a time-bound target for paying all workers a living wage. Furthermore, no evidence was found that the company discloses the proportion of its direct workforce covered by collective bargaining agreements or its required working hours. The company discloses some indicators of workforce diversity, including the gender of its workforce by employee category. However, no relevant disclosure was found of the company disclosing additional indicators of workforce diversity. Additionally, no evidence was found that the company commits to gender equality and women’s empowerment.

The company commits to protecting personal data. However, no evidence was found of a privacy statement regarding the collection, sharing and access to personal data. Furthermore, no evidence was found that the company discloses its global tax strategy and the corporate income tax it pays in each relevant jurisdiction. The company does have a policy prohibiting bribery and corruption, and it includes corresponding clauses in its business relationship contracts. No relevant disclosure was found of the company’s lobbying and political engagement policy and its expenditure on lobbying activities.